Policy

2.2 Policy Analysis

2.2.1 Fiscal Policies

Fiscal Policies

Forecasting Government Position

In 2012, Govornment is going to face with many difficulties since Pure Thai Party has got the election in August, 2011 and right after that was a flood disaster. The flood is the worst in 50 years which have crippled entire areas of the country, causing at least 600 dead and thousands displaced. Not only that, the flood also causes many bad impacts to Thai people as well as its economy. Moreovers, the world economy’s situation is slowing down, that also affect many following economy and Thai’s economy is not an exception. Government now is facing with high unemployment rate, water management improving, reducing in FDI, and slowing down in economy. Therefore, Thai Government plays an very important role in order to recovery the country economy.

Forecasting Public Debt (% of GDP)

In order to maintain the economy in bad economic situation, the Government need to inject more money to stimulate consumers’ demand which will lead production increasing later on, thus stablize the economy. The Government will issue more bonds and sell it to BOT or private individuals to reduce deficits in Thailand. Moreover, the Government improves its water management and treatment after the serious flood happened by planning to borrow about 350 million Baht. That causes public debt in Thailand increases significantly.

In 2011 Thailand's public debt stands at 40.2% of GDP, while the debt ceiling stands at 60% or 600 billion baht. And according to the assessment said “Thailand would need 755 billion baht to rehabilitate for a stronger and more resilient economy” and total damages and losses are estimated at about 1.36 trillion baht - 1.28 trillion, so the Thai’s public debt will rise rapidly to 51% within the next two years. The official said even if the public debt reaches 51% of gross domestic product (GDP) as projected, that is still lower than the ceiling set by the...